According to the Complaint, FedEx is a global logistics company that provides a broad portfolio of transportation, e-commerce, and business services. Through its fleets of airplanes and trucks, FedEx ships goods to commercial and residential customers throughout the world.
In July 2016, FedEx significantly expanded its international operations through its $4.8 billion acquisition of TNT Express N.V. (“TNT”), a Netherlands-based logistics company with operations concentrated in Europe.
On June 27, 2017, TNT’s operations were crippled by a cyberattack known as NotPetya, which involved the spread of a malware virus throughout TNT’s systems. The timing of the attack was particularly problematic for FedEx, as TNT’s systems were paralyzed during the critical period involving the integration of TNT with the Company’s legacy European operations.
The Complaint alleges that throughout the Class Period, Defendants continually assured investors about its recovery from the Cyberattack and that any negative impact from the attack was minimal. Specifically, the Complaint alleges Defendants made false and misleading statements and/or failed to disclose that: (1) TNT’s overall package volume growth was slowing as TNT’s large customers permanently took their business to competitors after the Cyberattack; (2) as a result of the customer attrition, TNT was experiencing an increased shift in product mix from higher-margin parcel services to lower-margin freight services; (3) the anticipated costs and timeframe to integrate and restore the TNT network were significantly larger and longer than disclosed; (4) FedEx was not on track to achieve TNT synergy targets; and (5) as a result of these undisclosed negative trends and cost issues, FedEx’s positive statements about TNT’s recovery from the Cyberattack, integration into FedEx’s legacy operations, customer mix, customer service levels, profitability, and prospects lacked a reasonable basis.